LONDON: In a first for a major economy, Britain’s exports of services from debt swaps to Downton Abbey are close to overtaking those of manufactured goods, offering a way to narrow a persistent trade deficit.
Britain was the world’s biggest exporter of manufactured goods in the 19th century before it was overtaken by Germany and the United States, and later by Japan, South Korea and China.
Services, by contrast, have been a more durable source of advantage for Britain and in recent years they have become easier to sell around the world, thanks to the spread of the English language and the Internet, and greater demand for the kind of financial and business services in which Britain specialises.
Sometimes dubbed ‘invisible exports’, Britain sold £220bn ($335bn) of services abroad last year, second only to the United States. Its services trade surplus is not yet big enough to offset a shortfall in goods that has left Britain with an overall trade deficit since 1998. Even so, the trend is in its favour: as other countries get richer, they tend to spend more on services, and prices have not fallen as they have for many manufactured goods.
British services exports last year almost equalled the value of exports of manufactured goods, up from just half their value in the 1990s. They are likely to overtake within three to five years, according to former Bank of England policymaker Andrew Sentance.
Global services trade is growing faster than goods trade… and the UK appears to have quite a strong comparative advantage,” said Sentance, who now acts as an advisor to PwC, which itself sells audit and consultancy services abroad.
